Costco Can’t Escape ‘Healthy’ Coconut Oil Class Action Lawsuit

Costco Wholesale Corp. will have to face a class action lawsuit that alleges its coconut oil labels are misleading to suggest that the product is “healthful and delicious,” when it is not actually healthier than other cooking oils.

In its recent motion to dismiss the class action lawsuit, Costco argued that the plaintiffs never showed that the coconut oil caused them any illnesses, nor did they suffer any health problems.

Additionally, argued Costco, coconut oil has other uses other than nutrition, like on the skin.

U.S. District Judge David O. Carter rejected Costco’s motion to dismiss. Judge Carter noted that at this point in the class action lawsuit, the plaintiffs have established standing and had properly alleged that they relied on the label’s claims and lost money because of it.

Contrary to Costco’s argument, notes the judge in his order, the plaintiffs only claim that they suffered economic damages by purchasing the coconut oil and not that they suffered any health related issue.

The judge also pointed out that the plaintiffs claimed that they relied on Costco coconut oil labels that advertised the supposed health benefits of the product and found that the plaintiffs’ complaint therefore passed the “reasonable consumer test.”

“Plaintiffs allege it was misleading to convey the impression coconut oil is healthier than butter and other cooking oils,” wrote the judge in his order dismissing Costco’s motion. “That is all required at this stage. Drawing all inferences in plaintiffs’ favor, the court finds their allegations to be sufficient.”

Lead plaintiffs James Boswell and Michelle Salazar-Navarro, say in their class action lawsuit that they were tricked into buying Costco brand coconut oil because of claims made on the packaging. However, coconut oil is made mostly of saturated fat, allege the plaintiffs.

The class action alleges that Costco coconut oil is labeled as having “health benefits,” and also says the coconut tree is “the tree of life” and “tree of heaven.” Additionally, the plaintiffs claim that the labeling encourages consumers to use the coconut oil as a substitute for butter.

The plaintiffs claim that they spent extra money because they “believed Kirkland Coconut Oil was healthy, healthier than butter and other oils, and would not raise or otherwise detriment their blood cholesterol or cause increased risk of CHD, stroke, or other morbidity,” according to the complaint.

Judge Carter also upheld the plaintiffs’ contention that a class action lawsuit is an appropriate way to resolve the allegations. “[T]here is a likelihood of repeat injury for the class as a whole since some class members do not have the same knowledge’ as plaintiffs,” says the judge in his order.

The class action lawsuit claims that Costco violated the California Unfair Competition Law, the False Advertising Law, the Consumer Legal Remedies Act, and breach of express and implied warranties.

The plaintiffs are represented by Melanie Rae Persinger of the Law Office of Jack Fitzgerald, John Joseph Fitzgerald, IV and Trevor M. Flynn of The Law Office of Jack Fitzgerald PC, and Paul K. Joseph of the Law Office of Paul K. Joseph, PC.

The Costco Coconut Oil Mislabeling Class Action Lawsuit is James Boswell, et al. v. Costco Wholesale Corp., Case No. 8:16-cv-00278, in the U.S. District Court for the Central District of California.

UPDATE: On May 1, 2017, Costco proposed to pay a $775,000 settlement to resolve claims in a class action lawsuit alleging the grocery wholesaler misled customers by advertising its Kirkland coconut oil as healthy.

UPDATE 2: September 2017, the Costco coconut oil class action settlement is now open. Click here to file a claim.